Homeowners Associations (HOAs) play a pivotal role in maintaining the quality and value of residential communities. While often associated with rule enforcement and fee collection, HOAs are also responsible for the upkeep of common areas, infrastructure, and amenities that enhance residents’ quality of life. Engineers, particularly those specializing in civil, structural, and mechanical disciplines, are integral to the effective functioning of HOAs.​

The Importance of Engineering Expertise in HOA Management

Effective HOA management goes beyond administrative tasks—it encompasses the planning, design, and maintenance of community infrastructure. Engineers contribute by:​

• Assessing Infrastructure Needs: Engineers evaluate the condition of roads, drainage systems, and recreational facilities to ensure safety and functionality.​

• Providing Technical Guidance: They offer expertise in areas like stormwater management, structural integrity of shared buildings, and energy-efficient systems.​

• Supporting Long-Term Planning: Engineers assist in developing capital improvement plans that align with the community’s goals and budget.​

Best Practices for HOA Success

To foster a thriving community, HOAs should consider the following strategies:​

• Regular Maintenance and Inspections: Implementing routine checks and maintenance schedules helps prevent costly repairs and ensures the longevity of community assets.​

• Transparent Communication: Keeping residents informed about projects, budgets, and decisions builds trust and encourages community involvement.​

• Collaborating with Professionals: Engaging engineers and other specialists ensures that projects are executed efficiently and meet safety standards.​

How Criterium Hardy Engineers Can Assist

At Criterium Hardy Engineers, we specialize in providing engineering solutions tailored to the unique needs of HOA communities. Our services include:​

• Property Condition Assessments: Identifying current issues and potential risks in community infrastructure.​

• Reserve Studies: Helping HOAs plan financially for future repairs and replacements.​

By partnering with Criterium Hardy Engineers, HOAs can enhance their operational efficiency, prolong the life of community assets, and provide a safe and enjoyable environment for all residents.​

The words ‘safety or security’ mean different things to members of a condominium or HOA community.  While the board or property manager may be focusing on the common element safety dangers such as the pool or the walkways/ paved surfaces, unit owners’ biggest concern is unit security and household accidents.  In reality, condo communities are like families and therefore all safety issues are of concern to all members.

Having a board appointed safety committee would be a step in the right direction.  This committee should recommend units have hard wired smoke detectors in every bedroom of both ionization and photoelectric types.  Carbon monoxide detectors should be located on every level while condo buildings with hallways should investigate the need for self-closing and fire rated doors where required.  Hall doors should have proper weather stripping and sweeps to prevent gaps allowing both smoke migration and fresh air from fueling a fire.  Sprinkler systems should be inspected quarterly.

Many communities would benefit from an informal training program for the unit owners to remind them where the fire alarms are located and how to use them.  Fire emergency egress pathways should be well understood and posted. In some communities it may be useful to arrange an outside location where everyone gathers following an emergency clearing of the building to ensure all are accounted.

Here again, demographics drive safety concerns as much as anything.  With the boomers aging and moving out of the big family homes to downsize into the condo world, over 55-type condo communities are growing rapidly and with that the need for protecting our aging population becomes paramount.  Many communities are requiring ‘Knox box’ type of devices to provide access keys to first responders when the need arises.  These boxes allow a non-destructive means of emergency access to residential units as well as controls for gates; fire protection systems; elevators; and other critical equipment.

A typical fire safety checklist:

√    Are all combustibles more than 36 inches away from a wood or coal stove?
√    Do you have hard-wired smoke alarms near all sleeping areas?
√    Do you have a carbon monoxide detector near all sleeping areas?
√    Do you have a fire extinguisher in the kitchen and garage/ workshop area?
√    Are the attached garages separated from living areas by fire-resistant materials?
√    Are all flammable materials stored outside or in well-ventilated areas?
√    Are gas water heaters in the garage up at least 18 inches off the floor?
√    Have all bottled and natural gas fittings been inspected in last 12 months?

Fire safety checklist for egress issues:

√    Do all interior and exterior stairs have a railing on at least one side?
√    Do all stairs wider than 36 inches have railings on both sides?
√    Do all porches, balconies, and decks have railings around the perimeter?
√    Are the railings secure, i.e. could they withstand a horizontal force of 200 pounds?
√    Are all balusters or grillage spaces less than 4 inches wide?
√    Do any railings have integrated benches?  This encourages sitting on the top rail.
√    Are any porch, balcony, or deck railings less than 42 inches high?

Fire safety is no accident.  Safety does start at home.  To protect our families we all must turn a critical eye on all elements in the community and how they would function in an emergency.  There is no better time to do so.

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Published in Condo Media June 2019 edition

Cracks in foundations are by far the most common structural complaint raised in either reserve fund studies or transition studies.  They can occur in the youngest or newest condo building.  As condo documents usually assign the maintenance responsibility of their repair to the association, board members and property managers take them very seriously.  Maine condo buildings have many types of foundations including concrete block; brick; and mortared stone with the most common being poured concrete.

Most basements and garages have 4 to 6 inch concrete slabs and unless this is a slab-on-grade foundation, the slabs were poured independently of the foundation walls.  They are said to be ‘floating’.  Often the construction joint between the slab and wall can easily be seen.  The common slab crack complaint is hairline cracks appearing in spider web-like patterns.  These cracks can show up shortly after construction and are normally caused by shrinkage during the curing process.  The key point here is this type of slab cracking is rarely a structural problem, for after all, the slab could be completely removed leaving a dirt floor while the foundation walls and columns with footings will easily maintain a stable building.

Therefore, slab cracking is often more of a cosmetic problem.  Cracks are often repaired with a variety of grout, caulk, or epoxy products primarily to prevent groundwater penetration, insect entry, or radon gas infiltration.  Cracks showing differential movement on opposing surfaces can be a tripping hazard but more importantly an indication of serious sub-surface conditions needing further investigation.

Regarding foundation walls, the most typical problem with concrete walls are vertical hairline cracks, often starting at the top of the wall and traveling down to the floor slab.  A sub-set of these types of cracks are those that propagate often in a diagonal direction from stress concentration points such as the bottom corners of basement window openings.  The key point to remember is these types of cracks, even when they penetrate the entire thickness of the wall, normally do not constitute a structural problem as the loads from above pass unobstructed on both sides of the crack to the footings below.

However, when the wall surfaces on both sides of the crack are moving out of plane or the structure above shows stress in the form of movement or cracking sheetrock walls and ceilings above, further structural evaluation is warranted.  Foundation cracks should be sealed if periodic water infiltration occurs.  Repairing cracks from the outside if often the best method, but due to the excavation costs involved, repairing the crack from the interior by injecting a crack filling material has become a routine solution.

When horizontal wall cracks; multiple closely spaced vertical cracks; or large diagonal cracks in basement corners are observed, these conditions may indicate more serious problems related to settlement or other structural problems.  Similarly, a single vertical crack that is much wider at the top of the wall may indicated foundation settlement problems stemming from poor soil conditions; hydrostatic groundwater pressures; or frost heaving.  These problems should be directed to a knowledgeable consultant.

Regarding concrete block foundation walls, most of the guidance above can be used with some exceptions.  By their nature concrete block walls are often not well reinforced and are subject to inward movement from various soil pressures causing these types of walls can bulge inward.  Ice lens forming about 3 feet below the ground surface can expand and push concrete block walls inward.  This can even occur from a vehicle’s weight being too close to the foundation, such as oil delivery truck.  When horizontal cracking is observed in block walls, steps should be taken quickly to prevent further movement.  These types of walls are also very susceptible to water penetration even when foundation drains are present often requiring serious water proofing repairs.

The key to maintaining a sound brick or concrete block foundation is periodic vigilance to ensure loose or dislocated masonry elements are not ignored.  If you observe a ‘stair step’ patten crack in the mortar joints of a masonry foundation wall, it typically means settlement has occurred under the ‘step’ section of the wall. .  Any observed bulges or horizontal movement, as well as new cracks, should be quickly addressed.

Many Maine condominiums have been converted from old multi-family apartment buildings with mortared or un-mortared stone foundations, some with brick foundation walls above the ground surface.  These foundations have stood the test of time and are more than 100 years old and if well maintained can last another 100 years.  They are more likely to allow the entrance of ground water due to their porous nature and the necessary steps should be taken to protect the structural elements and indoor air quality of the building if high moisture is a problem.  Old foundations are like people.  As they age, they need some extra care but they have already met the test of time.

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So what keeps you up at night? If you are a condo board member or a property manager, it might be that dreaded phone call reporting calamity at the condominium. Whether it is the report of a fire; or a frozen sprinkler leak; or an injury due to a common element failure, the association’s actions in the past, in the present, or in the future will determine the ultimate outcome of association liabilities.

Condominium associations can assume a wide range of liabilities in this litigious environment we live and this article will not address most of these occurrences such as employee or third party lawsuits; violations of board fiscal responsibilities; and failure to follow administrative directives found in the condo declaration documents, to name just a few. Instead, this article will focus solely on Breach of Duty issues associated with common or limited common elements that could have been foreseen or avoided with proper attention by the community leaders.

Water Infiltration

One of the most common problems facing any building complex is water. Moisture infiltration through the building envelope can develop in virtually any type of structure. Keep in mind the building envelope includes not just the roof surface and exterior wall siding but also windows and doors as well as the foundation itself. Water infiltration takes as many forms as there are states of water, that is, moisture damage can be caused by free running water, ice, steam, and vapor. One of the most important issues to remember is water in any form requires time to cause damage. A short duration wetting rarely caused serious or extensive damage.

A vigilant condo board will have in place protocols and procedures to discover the first signs of water problems through the use of routine building inspection of the common areas and a population of unit owners informed on how to advise the board on water problems in their units. The condo’s building maintenance plan will require a visual inspection of all roof surfaces after any wind event over 50 miles per hour or hail or ice storms. Common area basements and crawlspaces should be viewed after extended rain events. All unit owners should be warned about freezing pipes and sprinkler systems. This is especially true for communities with a large proportion of snow birds taking extended vacations during the winter months. Requirements for low temperature alarms; minimum year-round thermostat settings; and hot water overflow pans should be well understood by all owners.

There should be a guideline in place for what actions are needed when a building envelope water infiltration problem is reported. The action needs to be timely and documented with the issue directed to a pre-determined individual who has the knowledge to understand the seriousness of the problem and the authority to act.

Perils of Poor Maintenance

An example of what can go wrong can be illustrated by the recent case of a relatively new four-story condominium building with a flat rubber membrane roof in Portland, Maine. The top floor unit owner observed some signs of interior wall water stains on the north side of the building. The problem was reported to the property manager who advised the board to hire a roofer to inspect the roof. As the water infiltration appeared to come and go with the way the wind blew, the board felt the problem could be put off as there were more pressing projects. Time passes before the unit owner hires his own building inspector who discovers a tear in a roof membrane seam was allowing water to enter the exterior wall cavity. Further invasive inspection of the exterior wall revealed that not only was the wall oriented strand board (OSB) siding beginning to rot but most of that side of the building’s fiberglass insulation was water saturated and the sheetrock walls had significant mold contamination requiring the unit owner’s family to move out of the unit during the mitigation and costly repair project. All would agree this was an avoidable liability for the condo, if prompt action had been taken.

Similarly, if a unit owner reports recent sheetrock cracks or door molding seams opening and doors not closing properly, the board should not assume it is a unit owner’s responsibility to repair. The interior walls may not be a common element, but the causes of the reported problems may relate directly to a common element such as the foundation or building framing. Taking all such reports seriously will show the owners their concerns are being listened to and potentially head off a widespread global problem throughout the entire complex.

Trip and fall hazards should also be taken seriously to avoid Duty of Care liability. Whether it is missing tiles on the swimming pool deck; damaged carpet in the halls or stairways; or the depressed asphalt pavement that ponds and freezes every winter, these problems are usually well known before the accident happens. You do not want to be the board member in front of the judge when he asks you how easy would it have been to repair the tripping hazard. And don’t forget the hidden fire hazards such as uncleaned common dryer vent ducts or lapsed inspections of the sprinkler system. Don’t depend on hindsight when it comes to risk management.

Article written by Jack Carr, P.E., R.S., LEED-AP, Criterium Engineers
Published in Condo Media February 2020 edition
Download a PDF Version of this Condo Media Article

There is an old Chinese saying, ‘May you live in Interesting Times’. This statement is interpreted to be more of a curse than a friendly greeting, as the interesting times refer to upcoming periods of chaos or uncertainty. Ask any investor or economic forecaster what they fear most, it is uncertainty. Unfortunately, this is the economic environment today’s condominium and HOA board members find themselves in as they develop their future reserve fund budgetary plans.

No matter what your political persuasions are, the continuing blur of economic headlines about fluctuating international trade tariffs; economic retaliations; the price of eggs and cars; soaring housing entry costs; massive government job cuts; stagflation warnings; etc., leave many of us with feelings of uncertainty. For years we have recommended to our Maine clients the need to update reserve fund plans every 4 to 5 years. This rule of thumb needs to be reconsidered in this present climate, as international tariffs will have a significant impact on condo communities.

One thing we can be certain about is a tariff war with our closest neighboring trading partners, as well as China and Europe, will have unintended consequences. Whether the imposition of tariffs is for negotiating perceived trade imbalances or a long-term protectionist policy, there will be a direct impact on the future cost of goods and a reversal of any recent gains on inflationary pressures. While this is a countrywide problem and we are all in the same pool together, some US regions and industries are more in the deep end than others. For this reason, let us consider how an international trade war will affect Maine and more specifically our condominium and HOA communities and what we can do about it.

Canada is Maine’s largest trading partner with over $6 billion crossing our shared 600-mile border. Maine exports $1.5 billion worth of goods to Canada. Maine is highly dependent of Canadian energy importing over 80% of our home heating fuels. One of Maine largest industries is timber but due to historical overharvesting practices a large portion of our lumber goes into Maine’s pulp and paper industry as most of our harvested logs are too narrow to produce structural lumber. Instead, Maine imports from Canada over 85% of our structural lumber needs ($200 million) such as 2×4’s, 2×6’s, etc. to construct our residential and commercial buildings.

On average, lumber costs account for about 10% of a Maine building. It is expected that a 25% tariff on Canadian lumber will raise our lumber import cost by $50 million or 5 to 10% of a new condo unit cost based on estimates from the Maine Association of Home Builders and Remodelers. Similarly, Maine’s construction industry sources much of its cabinets, roofing materials, insulation, and windows from Canadian manufacturers while drywall and appliances are coming out of Mexico. China of course is a source for many other building supplies and products.

Unfortunately, all of this comes at a time when Maine is desperate for new multifamily and condominium units. Instead, the National Association of Home Builders has predicted the tariffs will cause a dramatic slowdown in residential construction due to the expected prohibitive cost increases which appear to conflict with the government’s executive order to increase housing supply and affordability. So, the question arises, what is a condo board to do in the face of rising future costs when preparing the next reserve fund budget?

In the recent past your engineer or reserve fund specialist would prepare a budget based on ‘in-kind’ asset replacement/ repair for each reserve component line item and adjust with a standard inflation rate 3 to 4% as approved by the board. This practice should be revised in today’s environment of uncertainty. Whether it be the talking heads on the evening news or your condo accountant, nobody knows what the future holds. It is uncertain which tariffs will be implemented or how long the trade war will last or what is the impact on your community’s specific project costs and schedule?

For these reasons, a standard reserve fund study may not be the best choice. Instead, discussions with your reserve fund consultant about changing to a more comprehensive reserve fund study approach would be in order. An enhanced engineering analysis will go beyond ‘in-kind’ replacement but instead consider upgrades or alternative materials taking into consideration life-cycle savings; maintenance ease; or operational efficiencies. Objectively reviewing the available options for modernization, maintenance, and repair may produce sufficient cost savings to offset the surprises in the future.

As an example, an enhanced study could reveal your community roof surfaces are not wearing equally due to sun exposure or construction methods. This could suggest a more economical roof resurfacing plan based on roof resurfacing phasing allowing the extension of capital spending to later years to spread cash flow needs. Similarly, the planned HVAC replacement program could convert from oil to natural gas or from conventional systems to heat pump driven systems. Thinking outside the box may be the solution to facing interesting times.

Written by Jack Carr, P.E., R.S., LEED-AP, Senior Consultant Criterium Engineers
Published in Condo Media

Perhaps the most dreaded sound in an HOA or condo complex, other than a fire alarm or screaming siren, is repeated unit owners calls reporting a pest infestation.  Pests can come in many types of creatures, both large and small, including bats, seagulls, geese, rodents, mold spores, and wasps. For this brief article our focus on this unpleasant subject will be insects.

Infestations of Pests

The most familiar of these natural but unwanted creatures are ants, mosquitoes, and ticks because of the fear they breed regarding disease and physical damage.  Property managers and board members who have experienced a serious insect infestation in their community know unit owners can become very emotionally upset if insect problems develop in an apparent uncontrolled manner.  Some of the most important aspects to consider when this problem arises are:

1. Serious insect infestations cannot be swept under the rug. The word will get out beyond the community boundaries often becoming more of a problem than the infestation itself. It will affect the HOA’s and property manager’s reputation. It will linger after the problem is solved depressing market value of units and volume of prospective future buyers.
2. The cost of remediation will be more than the cost to prevent the problem in the first place.
3. Infestations of pests affect daily life leading to a decline in perceived quality of life and increased resentment by the unit owners.
4. Some infestations can cause widespread property damage to both common and unit controlled elements including structural wood deterioration; contaminated insulation; holes in the building envelope leading to additional damage; and expensive repairs to electrical and ventilation systems.
5. Disease spread and the potential of costly liability issues for the board and association.

Management of this problem requires the bylaws’ policy and procedures include preventive measures to ensure good communication between the unit owners and management to report problems and relay specific action instructions. This will include a well-defined step process of authorization and scheduling of needed pest control services to apply sprays, mists, traps, etc. recommended by professional pest management companies. Many of the suggested preventive measures are common for all insects but some actions are very specific to certain insect threats.

ANTS

The good news is termites cannot cross the Piscataqua River into Maine. Apparently Maine’s long, cold winters are tough on these creatures and those termites hitching a ride in firewood or other items from away do not make it to the breeding season. This good news may turn bad with future climate change.

This means our own hearty Maine black carpenter ants are the primary problem. Therefore, the community’s Property Committee should be trained in spotting telltale ant-sign such as the appearance of saw dust in odd places along the exterior walls and foundations. Even observing woodpecker activity in the form of holes in the wood siding and trim is a sign as these birds being drawn to the wood by hearing insect activity. This sign may be double jeopardy as it also may be sign of water infiltration into the building as wet wood attracts wood destroying insects.

MOSQUITOES

News reports of the northern spread of Eastern Equine Encephalitis; Zika; and West Nile Virus has got the attention of Mainers. There are many preventive steps that should be taken before authorizing a professional spray/ fogging application in the community. The Property Committee or landscape service company should be charged with eliminating any potential breeding habitat areas such as water ponding locations or open containers. Granular insecticides in drains and other water collecting property elements can be effective but should be strictly controlled by your pest service.

TICKS

These small insects are becoming a very serious health hazard in an increasing number of locations in Maine, particularly in southern coastal counties. Each year there is a reported increase in both Lyme and Powassan Disease. As with mosquito control, HOA communities often defend against ticks with chemical boundary sprays recommended by professional pest services.  An informed property management team may consider more environmentally safe pest treatment methods.

There are natural pesticides derived from organic materials such as oils gathered from plants.  Other pest control methods could including the HOA restricting bird feeders to the edge of the property to avoid attracting deer and rodents carrying ticks. When designing the community’s amenities such as walking trails; playgrounds; and landscaping consider using materials ticks do not enjoy. This could include a boundary of wood chips around the property borders or drip edge around the building foundations. Gravel and mulch also form a barrier ticks do not like to cross. Ask your landscaper about deer resistant plants; frequent trimming of tall grass areas; and to landscape some areas with Xericape techniques and materials.

Pest control does not have to be expensive with a little common sense. Inform the unit owners how they can help themselves. Direct them to the many websites with good information on personal protection from ticks, as well how to protect their pets. We should not be afraid of the natural world but respect it and not let those little pests bug us.

Article written by Jack Carr, P.E., R.S., LEED-AP, Criterium Engineers
Published in Condo Media April 2020 edition
Download a PDF Version of this Condo Media Article

If your house, condominium or commercial office building is like most built in the last 50 years, it probably has a sloped roof with one of the following roofing materials:

• composition shingles
• composite tile
• cement or clay tile
• wood shingles
• metal roofing

Each type of roofing has its unique characteristics. However, there are also some common considerations to keep in mind:

1. Life – The actual service life of a roof varies according to the location and exposure to sun and weather. You should not assume that the age determines its condition.
2. Leaks – These are not usually the result of the roofing itself failing. Leaks usually occur due to the failure or improper installation of some related component such as flashing or underlayment.
3. Resurfacing – When resurfacing a roof, you should strip the existing material to the sheathing to allow for a visual inspection of the sheathing, and replacement of all of the related components.
4. Stains – If you have dark stains on a composition roof, it is probably mold. Diluted chlorine cleaners and products such as Shingle Shield are effective at removing the growth. New shingles are more fungus-resistant than some of those manufactured in the 1980s and ‘90s.
5. Trees – Cut back overhanging tree limbs. They can wear a hole in your roof from the wind blowing through the trees.
6. Gutters – If you have gutters, keep them clean. Gutters full of debris are far worse than no gutters. Debris encourages fungus, which can infect the roof sheathing. Rot and mold are the result.
7. Wood – If you have wood shingles, make sure that they are treated for fire resistance and that the treatment is kept current.
8. Clean – Keep your it clean, especially the details around skylights, dormers and valleys, and take note of any change in shape – this is where leaks start.

Your roof has an important job to do—to keep you dry in all kinds of weather. If you take care of it, you will get the most reliable protection and longest life.

Workmanship, Quality Control & Water…

Probably because I have inspected thousands of condo buildings and their units for construction defects and other issues, I am often asked by both prospective condo buyers and property managers to name the most common problems found in new condo developments. Interesting enough, new condo buildings have more hidden problems than older facilities whose defects have manifested themselves over time. Therefore, my first response to a buyer is to hire a professional building inspector before purchase. To a board or property manager, I recommend engaging an engineer to conduct a transition study prior to facility acceptance.

When & Why

A building inspection is like an auditor looking over the books. If no early problems are discovered, the process goes more smoothly. When issues appear early, though, it is a strong indication that a more in-depth investigation is needed. Another maxim: problems are rarely found in the materials and equipment; rather, defects are primarily due to workmanship quality control and water in all its forms.

1. Grading/Drainage
   New grading is prone to experience settlement. This often manifests itself in sunken storm drain grates; uneven paved surfaces; cracked sidewalks; driveway surface depressions allowing ponded water; drip-edge ground sloping toward the foundations; etc. Sometimes these problems can only be observed during rain events, but they can also be indirectly discovered from visible soil erosion and dried water strains.
2. Building Envelope
   The building envelope includes exterior siding materials, doors, windows, and roof surface.  As mentioned earlier, water or air infiltration problems are not due to defects in materials but rather improper flashing, poor use of fasteners, and not following manufacturer’s installation recommendations. A review of the manufacturer’s specifications can be the most productive inspection technique.
3. Foundation Cracks
   Most foundations use concrete, and concrete shrinks as it cures. Steel or fiber reinforcement is used to control and minimize cracking during the curing process. For this reason, most cracks in concrete are not a sign of structural problems or foundation settlement. Most building engineers can quickly determine the significance of observed cracking. Often water infiltration through the cracks is a greater issue.
4. Wood Flooring
   Floorboards separating or buckling is a commonly reported problem in newly installed solid wood floors. Assuming the floor has not experienced a recent flooding event, movement of solid wood floors is often due to the installer not allowing the floor to acclimate to the interior’s humidity level. Floor wood typically has a moisture content of 6 to 8% moisture content in New England homes. If the floor material is not stored for a few days in the home’s environment prior to being installed, floor movement can result.
5. Plumbing
   Always turn on the faucets and look under the sink. It’ surprising how many water leaks can be found with just this simple exercise. One of the most common problems discovered is the improper reversal of the hot- and cold-water piping.
6. Ventilation Ducts
   Ductwork is not always sealed during construction, resulting in dust and debris from operations settling in the ducts. Ducts full of dust and debris should be cleaned by a professional.
7. Paint
   Though full paint coverage may be called for in the specifications, sometimes tightened schedules and poor supervision allow areas such as basement area, closet ceilings, and other less visible spaces to be overlooked. Paint surfaces should always be inspected with a strong light applied at an angle. Painting irregularities, called “holidays,” can often only be seen using this method.
8. HVAC Systems
   Modern systems require final reviews to determine if they are operating within their design parameters. This may include a review of the balancing report, use of anemometers to measure air flow, and temperature readings at floor and wall registers. Room temperature controls can be adversely affected when placed where direct sunlight can reach them.
9. Unauthorized Substitutions
   A review of the project specifications can reveal inferior material or equipment has been substituted. This is typically done to save the developer money. Whether the substitution is equal or better than first specified is often a subjective matter, but still should be judged to be acceptable by the intended user.
10. Incomplete work
    This issue can take on many forms, but the most important is life safety issues. This includes adequate fire sprinklers, fire-stopping seals around pipes and conduit, and code required fire separation. Fire alarms and CO2 detectors should be tested.

Article written by Jack Carr, P.E., R.S., LEED-AP, Criterium Engineers
Published in Condo Media October 2020 edition
Download a PDF Version of this Condo Media Article

Real estate investors have known for years that 1031 property exchanges can save taxes. A cost segregation study is something else investors should consider at the same time—as both may save taxes and improve cash flow. Here’s how a cost segregation study may benefit your next transaction.

Whereas cost segregation studies are often conducted at the time of purchase; 1031 property exchanges are arranged at the time of sale of the investment property. The goal of the 1031 tax savings device is to postpone the recognition of capital gains on the relinquished property by shifting the tax consequences to the books of the new property purchased and thus deferring the tax payment into the future.

The goal of a cost segregation study is to accelerate depreciation expenses into earlier years of a real estate investment’s lifetime. This action allows these accelerated deductions to increase allowable expenses in the early years of the investment deferring tax payments into the future. This will produce increased cash flow while benefiting from the time value of money to an estimate 5% to 10% of the building’s cost basis.

This proven tax strategy is accomplished by segregating personal property (Section 1245 assets) out of long-term depreciation categories such as commercial buildings (39 years or apartments – 27½ years) and reclassifying these assets to shorter depreciation categories including 5, 7, and 15 year. The additional side benefit is the values of each of the study’s components, including Section 1250 assets such roof, HVAC, and building façade components can later be used to claim an early retirement loss or partial disposition for any remaining depreciation basis left when the asset is replaced.

1031 Exchanges & Cost Segregation – who to contact

Talk to your tax specialist about 1031 property exchanges and partner with Criterium Engineers’ experienced team of cost segregation engineers. Together, we can work to maximize your real estate transaction.

HOA Maintenance Plans

As a young engineer, the most valuable lesson I learned early on was not to try to remember everything but know where to find the answers. It is no different for a new condo board or property manager. The Community Association Institute (CAI) has gone to great lengths to provide community leaders with a wide range of resources needed to operate a successful condominium or HOA complex. When it comes to the critical task of maintaining the common assets of the community the first step should be downloading and reviewing CAI’s “Best Practices: Community Association Maintenance” off the web site at https://Foundation.caionline.org/publications/best-practices-reports.org

All condos great or small; tall or long; simple or complex need a Maintenance Plan. No exceptions. The principal fiduciary duty of all condominium leaders is to Maintain, Protect, and Enhance. The only way to successfully implement such a plan is to create a Maintenance Program to implement the Plan in an efficient and cost-effective manner. A well written program will help to define the roles and responsibilities of both the association and homeowner as well as assure a connection between the Maintenance Plan and the recommendation of the most current reserve fund study. There is no need to start from scratch or re-invent the wheel. It is all spelled out in the aforementioned best practices report containing recommendations on developing plans, programs, and checklists.

It is not surprising some established condominiums do not have a Maintenance Plan. When developers turn over a condo complex to a new board often only drawings, specifications, and equipment manuals are provided, but no plan. A manual of how to tie all this data together is nowhere to be seen. A Maintenance Plan is so vital to a community’s future success some states (California, Minnesota, Oregon) require it by law. But the most important reason is to save money. These savings come from the community’s future financial stability; reduction in board turnover; higher property values; reduction in risk leading to lower insurance costs; and reduced reserve fund needs.

Simple Vs. Complex

Like people, all condominiums and HOAs are unique but they fall into two categories, Simple and Complex. Simple condos have inventories of common assets of primarily building envelopes and exterior infrastructure like roadways and landscaping found in the CC&R’s (covenants, conditions & restrictions) and site plans. The assets come with maintenance manuals and warranties. Other sources of asset information come from property managers, maintenance contractors, and reserve study engineers. Management tools can be limited to spreadsheets and bookkeeping software.

Complex condos on the other hand typically include mid and high-rise structures often with master associations rather than horizontal and low-rise multi-plex units. Complex condos share common systems such as mechanical, electrical, plumbing, and elevators. They have more extensive systems for security; communication; life safety; recreational facilities; and other amenities. As these communities have larger budgets with more systems to monitor, they need both preventative and corrective maintenance programs.

Preventative maintenance can include predictive maintenance using technical data analysis from sensors or field data to monitor for warning signs and prescription maintenance to establish estimated schedules to anticipate failure dates of component failures to compliment season maintenance schedules for periodic repetitive repairs and servicing. These complex condos have a more comprehensive schedule of inspections, photo inventory, and infrastructure reviews.

Also monitored is the community’s corrective maintenance history of component repairs due to premature failure such as buckling sidewalks; roof leaks; and mechanical failures. Similarly recorded are items falling into the deferred maintenance category as these are the most likely candidates causing premature failures, safety problems, and avoidable expensive repairs.

The catastrophic failure of the Florida high rise building in Surfside has added a new dimension to maintenance and reserve fund planning. In the past, long term inspections were limited to 30-year structural studies and occasional infrastructure reviews. Now most condo maintenance professionals recommend much shorter inspection intervals for both non-structural and structural common components. Non-structural include fire and life safety as well as MEP (mechanical, electrical, plumbing) systems.

Structural components include both primary load bearing building elements and assets not directly supporting the building such as awnings and decks. Benchmarks to help in defining the scope of structural inspections can be found in the American Society of Civil Engineers (ASCE) publications: “Guidelines for Structural Condition Assessment of Existing Buildings” and “Guidelines for Condition Assessment of the Building Envelope”.

So where to start? As with any task it starts with leadership. The board needs to find and support a committee chair to form a team of volunteers dedicated to developing a Maintenance Plan and subsequent program of implementation. This often requires the board to establish a Charter defining the committee’s scope and responsibilities while creating the culture of the importance of planning ahead. As JFK said many years ago, “The time to repair the roof is when the sun is shining.”

Written by Jack Carr, P.E., R.S., LEED-AP, Senior Consultant Criterium Engineers
Published in Condo Media